Rising costs and lagging incomes are squeezing Londoners’ incomes. Frank Soodeen looks at how living standards could be improved.
JRF’s Minimum Income Standard (MIS) has become an important tool for gauging the impact of policy and the changing economy on households’ chances of reaching an acceptable living standard, as defined by the public. Now the research team behind MIS, in collaboration with Trust for London, has taken this work further, measuring the distance between Londoners’ incomes and what the public believe is necessary for a very modest but acceptable standard of living in the nation’s capital. As with the national research, it shows how – despite London’s wealth – people at the bottom have been squeezed by rising costs and lagging incomes over the past few years.
Three things stand out:
- social rents in London have risen by over a third since 2008;
- childcare costs have risen by nearly two-thirds; and
- public transport fares have risen by a quarter.
Over the same period, average earnings grew by 10 per cent. Higher living costs not only affect the households concerned; they pose a threat to the city’s long-term competitiveness as it becomes harder for people to afford to live there.
City administrators have tried to respond to the challenge. Transport for London has put in place a wide range of concessionary fares to help offset some of the price rises caused by necessary infrastructure upgrades. In a city where the population depends heavily on public transport, this has been vital. The Greater London Authority has also done good work leading uptake of the London living wage. At the more local level, a number of London boroughs are exploring ways to subsidise the construction of more affordable homes, alongside or outside of the Government-run Affordable Rent Model, to keep social rents low.
Welcome as these local innovations are, national policy remains a crucial influence on living standards for people at the lower end of the income scale. On childcare, for example, there is evidence to suggest that some fee-paying parents are effectively paying extra to fill a funding shortfall in the Government's flagship early education policy. On housing, the decision to cut public subsidies and allow social landlords to increase social rents at a faster rate than previously means that the upward pressure on housing costs in the social rented sector will continue for the foreseeable future.
The answer to how we address these issues isn’t automatically that London should be granted more powers. Some aspects of social policy are better held at the national rather than regional or local level. But clearly there could also be major gains from reforming the delivery of certain welfare, employment, skills and housing services so they can better address local economic realities. This is a debate that will have to proceed slowly. Getting it right will take careful thought, not least because getting it wrong risks causing harm to people who are already economically vulnerable.
In the meantime, there should at least be scope for better policy coordination between different levels of government. Past JRF research has called for robust assessments of the local impact of national spending decisions, and agencies being allowed the freedom to adapt and innovate within a more austere spending climate.
JRF’s forthcoming anti-poverty strategy will try to say more about these points.